Does the US Need a New Broadband Policy?

Ken Hubbard worries that broadband speeds in the U.S. aren't adequate for the next wave of Web content.

Hubbard, president of networking startup InteliCloud Technology, said he's generally not a fan of large government programs, but it may be time for the U.S. Congress to look at ways to encourage roll out of faster broadband services.

Internet users are demanding more video and high-bandwidth applications, and high-definition video is on the way, said Hubbard, whose company is set to release a network appliance it dubs "network in a box." "The infrastructure is not strong enough to support the growth that needs to happen," he said. "[Broadband] has got to become ubiquitous."

Hubbard's concerns have been echoed by several groups in recent months. Groups calling for a wide-ranging U.S. broadband policy say the nation is falling behind others in key broadband statistics. One problem, however, is that the debate over broadband policy spills over into many issues, including concerns about a lack of competition and net neutrality.

In March 2004, President George Bush called for broadband to be universally available across the country by 2007 -- a goal that has not been reached. Bush's broadband policy also focuses on keeping Internet service free of taxes and deregulating broadband providers, initiatives that largely came from Congress or the U.S. Federal Communications Commission.

The call for a stronger broadband policy is far from unanimous. Broadband providers say they're spending billions of dollars a year to expand and improve their networks. And an FCC decision to deregulate telecom-based broadband providers, allowing them to stop sharing parts of their networks with competitors, is only three years old, others say.

Critics of the FCC's deregulation approach say it has eliminated most competition. But deregulation is "really bearing fruit" and should be given more time to work, said Bret Swanson, senior fellow at the conservative think tank, the Progress and Freedom Foundation (PFF).

In many cases, the debate about broadband policy gets wrapped up in related debates about net neutrality and broadband traffic management, Swanson added. While several groups have called for the FCC or Congress to prohibit broadband providers from blocking or slowing some Internet traffic, these net neutrality rules could limit legitimate traffic management techniques, causing network congestion, he said.

Passing net neutrality rules could "halt what is a very positive solution right now," he said. "The way a so-called new broadband policy is talked about seems to not be a step forward."

Some advocates of a new broadband policy also talk about the need for more competition, but because of the cost of building networks, a significant increase in competitors isn't likely, Swanson added. The U.S. may be better served focusing on two large, robust networks with wireless and satellite service filling in the holes, he said.

"You're never going to have dozens or hundreds of broadband providers to your home," he added.

Advocates of a broader national policy say broadband brings huge economic benefits to the U.S. -- a 7 percent increase in broadband adoption would create 2.4 million new jobs and have an annual economic impact of US$134 billion, according to a study released in February by Connected Nation, a nonprofit group focused on improving broadband adoption across the U.S.

Critics of current policies say the U.S. is behind several other countries in broadband adoption, and many rural areas have little or no access to broadband. In addition, U.S. broadband users pay more for broadband and have access to slower speeds than several other nations, they say.

U.S. broadband providers say they are rolling out faster broadband -- Verizon, AT&T and Qwest are all moving forward with fiber-based deployments. But Hubbard, whose company will aim its first product at providers of Internet-based services, doesn't see it happening fast enough to keep up with demand.

"To me, [the broadband] industry has had a shot at it, and they haven't done anything with it," he said.

Critics say Bush's universal broadband goal was largely unsuccessful, with many rural areas still without service or with little competition. The California State Broadband Task Force, in a January report, found that about 4 percent of the state's households, or 1,975 communities, didn't have access to broadband. About 1.4 million [m] California residents, more people than live in 11 other states, don't have broadband service, the report said.

The California report is one of several released in recent months calling for a more comprehensive broadband policy in the U.S. The California task force focused on several things the state could do to encourage broadband rollout, including issuing state bonds to finance broadband expansion, 10 percent or 20 percent tax breaks for providers building networks in rural areas, and lifting the spending cap on a rural telecommunications program already in place.

Educause, a group focused on the benefits of IT on higher education, took a broader approach when it issued its Blueprint for Big Broadband in January. Educause called for a $100 billion investment in broadband in the U.S., with the federal government, state governments and private industry each paying for a third of the costs. The federal government would pay about $8 billion a year for four years under the Educause plan.

The goal is 100M bps to 1G bps of broadband speed available to each U.S. resident and business, said Wendy Wigen, an Educause policy analyst. Educause wants "deployment with a big D, so to speak," she said. "When [government sources] quote 95 percent access ... it is for DSL or cable modem, which we feel is not sufficient for the Internet demand that is just around the corner."

Democratic presidential candidates Barack Obama and Hillary Clinton have both talked about the importance of broadband, Wigen noted.

But Robert Atkinson, president of tech-focused think tank the Information Technology and Innovation Foundation (ITIF), suggested that big government programs aren't likely to gain traction in the U.S. An ITIF report this month compared U.S. broadband policies to several other countries, and found that nations such as Japan and South Korea created mandates for broadband providers that would have little chance of approval in the U.S.

Japan required DSL (Digital Subscriber Line) providers to rent out their lines to competitors at low prices, a policy the U.S. has moved away from. South Korea basically required broadband providers to build out the networks nationwide, Atkinson said. Broadband providers in those countries are "in a different world," he said.

While environmental factors such as weather and population density can have a major effect on broadband adoption, government policies can also help with adoption and rollout, Atkinson said. Instead of major spending projects, which could face major opposition, the recent ITIF report called for the U.S. government to take several smaller steps to encourage broadband rollout.

The U.S. government should adopt more favorable tax policies, allowing broadband network operators to depreciate their investments in next-generation networks faster, the report said. The ITIF recommended that the government make more wireless spectrum available, expand and reform programs aimed at delivering telecom services to rural areas, fund state programs already working to expand broadband deployment, such as the Connected Nation program.

In addition, U.S. residents have to decide what they want: fast broadband or broadband competition, Atkinson said. Part of the problem with the debate about broadband in the U.S. is that many groups have conflicting goals, with many consumer groups pushing for more competition, he said.

More competition is "completely incompatible" with super fast speeds, he added. Building competing broadband networks is an inefficient way to get faster networks, Atkinson said.

"This is not the widget industry," he added. "Competition works well in the widget industry because the fixed costs are fairly low."

U.S. policies should instead focus on rollout and speed, Atkinson added. "The goal should be to get as much broadband to as many people as possible," he said.

Atkinson and Link Hoewing, assistant vice president of Internet and technology issues at Verizon, both see potential in the Connected Nation model, a program started in Kentucky that uses state and private funding to push broadband into areas that don't have it.

Several other states are trying to replicate the Kentucky model that has expanded broadband availability from 60 percent of households in the state to 95 percent of households since January 2004. Verizon and other providers are working with states to map unserved areas and expand coverage, Hoewing said.

In rural areas in other states, "we've got some work to do," he added.

Like the PFF's Swanson, Hoewing pointed to the current broadband policy -- the FCC's deregulation approach. The more government-centric approach in countries like Japan and South Korea wouldn't work in the U.S., he said.

Competition in the U.S. between telecom and cable companies are driving up speeds and driving down costs, he said. Broadband speeds in the U.S. are already competitive with many other counties, he added. "It's pretty evident competition is there," he said.

But for InteliCloud's Hubbard, the U.S. broadband industry is moving too slow, and it's time for the government to take a more proactive approach.

"I think they will get there, but it may be another 10 years to get there," he said. "We need to charge our slow growth into fast growth."